(As always, comments are for Investors, only. Suggest Traders save their energy,)
Alios Pase I results due, possibly in conjunction with reporting Second Quarter Results. If management already has the data, given that they are likely in some degree being reactive to the brouhaha around VX 809/770 combo results, the info is very likely to be some combination of positive and ambiguous. They want to get-it-right-the-first-time-this-time and are risking brickbats from the always righteous sideline critcis on witholding material data. If the data is unambiguously negative they would be announcing it and proceeding with their previously stated intent to only be in the Hep C market for Cycle 1, of three cycles.
What interests me more is the probability that the Alios report is positive -- then what? Vertex then has all or almost all the elements for Cycle 2 with the announced decision to not be in Cycle 3. They are in the business of Growth Thru Research, not Efficient Liquidation. They have a history of monetizing those assets which are not in their growth path (HIV product and the Janssen milestones). Management would have in their portfolio an almost complete and separable business, including a Hep C specialty sales force. How many billions, useful for funding research, would some large pharma pay? This is a sell-the-Hep-C-business scenario, not a sell-Vertex scenario. One way or another the Hep C business will be gone in eighteen months. For us the question is, "How profitable will the divestiture be?"
More likely, the data for Alios nucs if positive, would result in Phase 2 studies in house at Vertex using the various combinations of all oral agents in the Vertex pipeline to treat hep C in all treatable genotypes in the shortest theorized treatment regimen approvable by the FDA to "one-up" the proposed advantages of the current known potential competitors in the future "second cycle" of treatments for hepatitis C.
An eight to twelve week treatment regimen with equivalent safety and efficacy would likely not only be competitive in the 'second cycle' hep C market worldwide, but would also take a shorter time to complete the Phase 3 studies required for FDA approval given the shorter duration of treatment regimen, allowing an opportunity to 'catch-up' to those new agents currently undergoing Phase 2 and 3 testing that will not be approved for market until 2014 at the earliest.
As the next generation of hep C treatments comes to market, the decision for Vesrtex to pursue it's future in this market will be a decision on where to invest it's research assets most profitably in the near term to allow funding for the future growth of the company and to satisfy investors.
I agree with you for the short to medium term. If the nucs report is positive the first thing Vertex will say is that they are rapidly moving into Phase 2b/ 3 trials. In the background they will be "selling an exciting future", now when buyers' desire is highest, and move their attention to those areas (CF, JAK3, etc.) where their longer term research asset interest lies.